“We have entered a third distinct phase for the subscription economy...
Starting in the early 2000s, the first phase took around 20-plus years in which digital subscriptions gradually took hold as a strategic lever for businesses across most industries, from Media and Lifestyle, to Financial Services, Gaming, and many more. It was followed by a second phase of marked acquisition growth during the COVID pandemic, which helped spike the already healthy consumer appetite for subscriptions. We are now entering a third phase, or what we see as the retention phase.
What is the retention phase? For us at FT Strategies, we are noticing a pancaking effect, where the rapid growth observed through COVID is now being flattened by the subsequent effects of economic downturn and cost of living pressures on consumers. Yet, at the same time, we observe that consumers continue to highly value the ability to try products and services via subscriptions, and ultimately appreciate the recurring relationship with businesses, when executed correctly.
What does this mean for consumers and businesses? The retention phase will likely be one in which consumers will be more reserved about their spending and will be more likely to jump from one subscription to another to find the best fit for their needs. Businesses will therefore need to think even more actively and strategically about how to retain acquired subscribers (especially those from COVID) with customer-centric payment and pricing strategies, more transparent and intuitive UX experiences, and increased personalisation of product offerings.
To shed light into the specifics of this third phase, we have collaborated with Minna Technologies and Savanta to try and delve into the trends and drivers underpinning the phase. The report aims to provide unique insights into what subscription businesses are currently thinking around their retention and payment strategies, proprietary consumer research on subscription habits and sentiments in the UK and USA, and the expertise and views from thought leaders.”
- George Adelman, Principal - FT Strategies
In producing the report, Subscription Economy: A Transformed World, we spoke to over 20 influential leaders in Financial Services, Fintech, Media and beyond, alongside 50 subscription business executives in different markets, and thousands of quantitative survey responses from UK and US consumers.
We can now share our data-backed market insights and our analysis of the key trends shaping the subscription economy right now and over the coming years.
Download the report to find out more about:
1. The consumer perspective
- Did you know that the rising cost of living is driving increased consumer awareness of subscription spend compared with 12 months ago?
- 59% of UK consumers and 55% of US consumers know exactly how much they’re spending on subscriptions. This awareness is strongest for 35-54 year olds.
2. The subscription business perspective
- The rapid growth in subscription-based adoption through COVID is being flattened by factors like the cost of living crisis. Subscription businesses have entered a retention phase, placing this at the top of their strategic agenda.
- Almost seven in ten (68%) of the 50 leading subscription businesses we surveyed say that retention is their ‘top strategic priority’.
3. The Banking, Financial Services and Fintech perspective
- The fintechs and banking brands that keep up with increasingly sophisticated UX requirements will benefit over the coming years, driving customer acquisition, engagement and loyalty.
- Led by Gen Z and millennials, consumers are demanding seamless customer experience and transparency. Capitalise on this opportunity by improving personalisation, enhancing opportunities for consumers to self-serve and partnering with subscription businesses to provide frictionless payments.
Evolving preferences of younger generations are driving seismic shifts in the way consumers engage with brands. Businesses must offer the flexibility they’re now demanding to stay competitive when consumers make decisions around prioritising their disposable income.
The points above are just a flavour of our findings. To gain a deeper analysis and actionable solutions to staying relevant to your customers, please download the full report now.